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引领未来商业与生活新知

Why India Doesn't Have A Phenomenal Payment APP Yet?

摘要：
Statistics show that India is the third largest smart phone market around the globe and there will be 314 million mobile Internet users by 2017. All these conditions have provided a natural growth environment for mobile payment, which has stimulated different parties to march into the mobile payment sector.

What led to the rise of e-commerce? Some people say that it was due to the lack of varieties of merchandise in offline retail industry, the relatively high price, and poor quality. Such downsides of offline businesses irritated consumers greatly. The increasingly demand for better shopping experience gave the e-commerce industry the chance to take off.

The theory mentioned above is confirmed by the Indian market.

Without a doubt, India is a rising e-commerce empire. According to statistics from the Federation of Indian Chambers of Commerce & Industry, the market scale of the Indian e-commerce industry will reach USD 38 billion in 2016. It’s estimated that by 2020, the retail sales of Indian e-commerce market will grow to USD 48 billion to USD 60 billion. However, despite the prosperity it has shown, the thriving e-commerce industry in India is actually struggling with a bottleneck caused by payment.

Pay on delivery remains mainstream in India as the e-commerce industry progresses

Statistics from the World Bank show that there are only 125,000 banks in India even though the country boasts a population of over one billion. What’s more, 47% of the population doesn’t have a bank account and second and third-tier Indian cities don't even have banks in town.

The lack of banks and a sufficient credit card system makes pay on delivery the mainstream way for consumers to pay for their merchandise purchased online in India. To put it in perspective, 72% of the online purchases on Indian e-commerce giant Flipkart is completed via pay on delivery. This figure goes higher to 90% in second-tier cities.

The high adoption rate of pay on delivery brings more pressure on the logistics sector. Whether it’s the e-commerce industry, online businesses, or logistics companies, they all want to promote the use of online payment solutions. To be specific, e-commerce platforms have to pay an extra INR 40 for the pay on delivery service per order as well as pay for the payment insurance and cash handling service.

As for logistics companies, although pay on delivery is their main source of income (70%), the cost is still hard to come by since the delivery agents have to deliver 1.24 times on average to actually get the merchandise to the buyer. That being said, the pay one delivery service brings more pressure to online businesses.

The mobile payment market in India is ready for a ride

Due to the lack of relevant infrastructure, India has always been a country that relies heavily on cash. However, it doesn't mean that India doesn't have potential in this sector. Once India is strong enough in technologies, talents, enterprises and the market, a new payment form will develop rapidly in the country.

The new payment form I am talking about here is mobile payment. Like I have mentioned before, almost half of the population doesn't have a bank account. But it should be noted that over one billion in the country has a phone.

Statistics show India is now the third largest smart phone market in the world and by 2017 there will be 314 million mobile Internet users in the country. All these elements pave the way for the development of mobile payment. Currently, many companies are preparing to enter the Indian mobile payment market.

Additionally, the Indian government is planning to build an economy that’s cashless in the future 10 or 12 years. To achieve such goal, the government has launched Payment banks and Bharat Bill Payment Services etc. so as to encourage people to use mobile payment to pay utilities and fees.

In April this year, former president of Reserve Bank of India, Raghuram Rajan, stated: “The Indian banking system is undergoing a digital revolution as the government promotes mobile payment.” Besides that, the Indian government has also reduced many fees for mobile payment.

There are three major payment brands in India: Paytm, Freecharge and Mobikwik.

Pushed by the government, market and enterprises, the Indian mobile payment sector has had some progress. At present, Paytm, Freecharge and Mobikwik dominate the Indian market.

Paytm：

The company received two rounds of financing from Alibaba and Ant Financial in 2015, amassing a valuation of USD 2.5 billion after the financing, which makes the company the largest in India in terms of valuation. So far Paytm has 126 million users with a monthly transaction average of 90 million and a daily average of 3 million. By May 14th 2016, Paytm has processed over a hundred thousand transactions in the O2O sector.

Freecharge：

Founded in 2010 in Mumbai, Freecharge started off as a top up and payment platform. Soon after its launch, Freecharge turned to focus on the mobile sector. Freecharge allows users to top up their phone and pay for online purchases, dining, data card, and satellite TV. In February 2015, Freecharge completed its C round financing at 80 million. Two months after that, Indian e-commerce giant Snapdeal acquired Freecharge wholly.

Mobikwik：

Established in 2009, Mobikwik ranks the third in the mobile payment industry in India. Different from the other two platforms mentioned above, Mobikwik later became focus on web portal platform instead after starting with mobile wallet. Mobikwik allows users to pay with deposit card and credit card. Other than that, its web portal also provides to-door top up services through which users can top up their account using cash. The company completed its C round financing in May 2016 at USD 50 million, which was led by Mediatek and GMO.

Statistics by June 2015

Prosperous as it is, India still doesn't have a phenomenal mobile payment product like Alipay

Faced with invasions of third party platforms, traditional banks are starting to fight back

Third party leaders such as Paytm have developed to the point at which they are now posing a threat to the traditional banking industry. Recently Paytm stated openly that the company would launch mobile bank service at the end of this year. Although mobile bank services allow individuals and small-sized companies make a maximum deposit of INR 100,000, they still don't offer loan services yet.

However, mobile banks can stimulate payments and transactions on their platforms through launching financial management foundations, insurance and pension products. To counter back, traditional Indian banks have also launched its mobile payment tools in hopes of winning this battle with its natural strengths.

Reserve Bank of India has released a standard payment application UPI, which can reduce the extra cost generated in small amount transactions. UPI doesn't require users to have a bank accounts and therefore has amassed a larger audience. So far ten banks in Indian, including Federal Bank and Yes Bank., have joined UPI. Statistics show that traditional banks have a user base of 636 million. If UPI can spread successfully among them, it would definitely bring up a great challenge to third party payment platforms.

Furthermore, HDFC Bank in India has recently launched a payment application that applies high-frequency sound wave technology, UltraCash, which allows users to complete payment without Internet connection or NFC. With only UltraCash, users can finish payment.

Users can make purchases and complete the payment process in dinning, shopping, and electronic shop scenarios via UltraCash. The money will be transferred from HDFC’s bank base. This whole process can be completed within just a few seconds, marking an exploration of Indian banks into the area of new technologies in mobile payment.

Cab-hailing platforms and telecom operators raise the competition

American cab-hailing service provider Uber is planning to develop its own payment wallet in India. It’s reported that Uber’s rival Ola is also planning to apply for license for mobile banking. Both sides have already made the move and applied for certification from the Reserve Bank of India.

At present, rules set by the Reserve Bank of India do not allow commercial platforms to develop their own wallet, but allow them to make half-closed e-payment tools for businesses. Uber wants India to be the second largest market globally. Once Uber and Ola have their own payment tool, they will have a higher growth in the Indian market.

What’s more, telecom operators themselves have an enormous user base. Making mobile payment an extra service can increase user loyalty for telecom brands. Moreover, the government is an important driving force that will shape the future development of mobile payment. There is a large crowd that needs safe, convenient and affordable bank services. In this sense, India has great potential in the mobile payment sector in the future few years.

The current mobile payment market

Looking from the developmental state and current layout of the Indian payment market, the Indian market is increasingly maturing in many aspects. From the level of the country, the Indian government is launching supporting policies and issuing licenses for startups, operators, and banks etc. This shows the efforts the government is making to support mobile payment business. In the area of technology, India has possessed sound-wave payment which is more efficient and safer. Besides that, India also has a big pool of IT talents.

From the perspective of the market, the enormous population India possesses and people’s demand for a more convenient payment form create immense market potential in the mobile payment sector. Indian consumers are growing reliant on mobile payment as the people start to use pay on delivery service less.

However, why the Indian market still doesn't have a heavyweight product like Alipay in China yet though it possesses the conditions above? To become Alipay, Indian companies will have to make some breakthroughs in the following areas.

Asset safety: Many Indians refuse to use payment tool and stick to cash for the fact that they just don't trust mobile payment tools. In this case, payment platforms also need to promote the idea and concept of payment tools and educate the consumers in this aspect while enhancing asset safety on their platform. Payment platforms need to make the consumers trust them.

Payment scenarios: A payment tool can attract and keep more users if it can meet more of users’ payment needs. At present, Indian payment tools can only satisfy some of the users’ payment needs. Payment platforms that integrate functions such as financial management, utilities, credit card payment, ticket booking, shopping and donation etc. haven’t appeared in the market yet. From this perspective, there is still a long way for Indian payment platforms to go.

The user experience: Considered the fact that Internet connection in most regions in India is quite bad and WiFi is hard find, a light and smooth APP that only consumes a little data traffic can attract users more easily.

The last straw: WeChat made use of its red packet function and made a glorious triumph during the 2014 Spring (In Chinese traditions, people give red packets in Spring Festival, an act that symbolizes good luck in the new year).

In that short period, millions of Chinese people added bank cards on WeChat and started to use WeChat Wallet to send red packets, a phenomenal even in the Internet industry in China. Freecharge once teamed up with WhatsApp and launched a similar function, which made little contribution to the user growth. In this case, the success of Chinese mobile payment promotions can’t be copied directly in the land of India. Indians would have to come up with innovative ideas that are fitted for local needs.